When the price of Party Package Deluxe is perceived as unfair this may have detrimental effects on our sales since consumers might not be willing to pay for our products and services. Therefore it is very important to make sure the price will be perceived as a fair price when establishing the price for the third, new, Party Package Deluxe in order to make sure consumers will experience positive transaction utility and purchase the package.
Whether consumers perceive the price as fair depends on the seller's costs and the comparisons to a relevant reference price (Thaler, 1985). Consumers are likely to make reliable predictions about our costs, since our company clearly states what services the Party Packages contain. It is evident that it would be more expensive for consumers to hire all the services we provide in our Party Packages on their own initiative due to quantity rebate we generate; therefore it is likely consumers will perceive our prices as fair taking our predicted costs into account. .
As stated earlier, perceived fairness also depends on comparisons to a relevant reference price (Thaler, 1985), therefore I would expect consumers to engage in comparisons of the Party Package Deluxe's price to relevant reference prices, in this case the Party Package Basic's and Grand's prices. The Grand Package is 100,- more expensive than the Basic Package and consist of three more features, namely lunch, gift package including candy, a pirate princess doll and pirate princess decorated cupcakes. Furthermore, the birthday girl or boy is provided with a booklet containing pictures of the party. Since our company has been making steady profit over a 2 years' period and consumer purchases have been roughly equally divided between the 2 packages. This suggests that the 100,- more expensive Grand option, consisting of 3 more features, is perceived as a fair price and it is therefore plausible consumers will use 3 more features priced at 100,- as a reference price to compare other alternatives with.